This article applies a general equilibrium model to analyse the impact of new rice technology on household income and uses agricultural household survey data from China to test the implications of this model. It is shown that, when a new rice technology becomes available, the adopting household will reallocate resources to increase rice production and reduce the production of other goods. Meanwhile, the non‐adopting households will do the opposite. Thus, the income from rice becomes increasingly concentrated in the adopting households and income from non‐rice becomes increasingly concentrated in the non‐adopting households. If only one source of income is examined, the introduction of new rice technology increases the inequality of income distribution in rural areas. But, if the total household income is examined, the distributional inequality is mitigated.